Royal Dutch Shell : Strategy management

Résumé du document

The Royal Dutch Shell is one of the most renowned companies in the energy industry. It is engaged in oil and gas exploration and production, transportation and marketing of natural gas and electricity, and marketing and shipping of oil products and chemicals. Shell is also oriented toward the renewable sources of energy such as wind, solar and hydrogen. This company whose the headquarters is in the Netherlands has extensive operations in more than 90 countries around the world and employs about 101,000 people. It produces around 3.2 million barrels of oil equivalent per day and is world's largest fuel retail network (45,000 services stations).

Shell core competencies are divided between the upstream and downstream segment. The upstream part refers to the ways we find and extract crude oil, natural gas and oil sands while the downstream refers to the ways we transform them into products. Shell invest a lot in the exploration and production as well as in the exploration and production research and development (R&D) in order to develop new technology to enhance the cost-efficiency and performance of the company. There is also a third segment called the non-operating corporate segment, which represents the functional activities supporting the whole group. This segment consists of the following functional activities: holdings and treasury, headquarters and central functions, and Shell insurance operations.

The major source of revenue still comes from the upstream segment with $20.2 billion earnings in the exploration and production, $5.3 billion earnings in gas and power and $941 million in oil sands (2009). In the downstream segment the oil products bring 446 million USD while the chemicals record a loss of $405 million (2009). The corporate segment recorded a loss of $69 million (2009).

Extraits

[...] We have made the choice to analyze the strategy management of the Royal Dutch Shell because we think it could be interesting to study how a multinational can set up a strategy in correlation with its external and internal environment in order to assure its future growth. That's why we will firstly begin with an assessment of the internal and external environment of the firm following the SWOT scheme to finally highlight the short term and long term strategy of Shell and analyze its relevance according to the SWOT and the strategy set up. A comparison with its competitors strengths and strategy will also be made. [...]

[...] SHELL SHORT AND LONG TERM STRATEGY RELEVANCE Since 1995 crisis, Shell is engaged in a societal strategy. Indeed Shell was accused to have a strategy oriented about profit and at the expense of social and environmental concerns. Consequently as the firm awareness decrease and the employees and investors worried Shell changed its strategy and adopted a more societal one. Shell is very concerns on the opportunities and threats on its market and always adapt its strategy in consequence this is the main reason why Shell is one of the leader in the industry. [...]

[...] One of the major decisions that Shell took in 2010 is the acquisition of an equity stake in Virent Energy Systems in order to collaborate on a joint technology program to convert plant sugars directly into diesel. This partnership combining the competencies of the both firms represents a key success factor for Shell to keep its leading position in the biofuels market as Virent is the leader technically concerning the production of sustainable advanced biofuels. Threats Environmental regulations Shell has to deal with several laws and regulations concerning the protection of the environment. [...]

[...] As well as Bp and Shell, Exxon counts on the market opportunities to develop their strategy. We can see that the company plans to increase its capital investments. Indeed, between $25 and $30 billion will be invested through 2014 to deliver major project and to meet the growing world energy demand. These investments aim to develop new technology, bring on new upstream projects, grow its chemicals business and increase its base refining capacity. However, these investments will mainly reinforce the company's position as an industry world leader and bring new supplies to the market. [...]

[...] Indeed the world costs of Shell are too high that's why it was necessary for them to launch a costs reduction strategy. Moreover their main projects will be profitable in only 5 to 10 years which do not favor a fast profitability. This strategy of costs reduction will enhance the investors trust and allow the firm to spend more on the R&D area to develop new technology in order to promote future growth. Thus Shell focusing its attention on performance increase and costs reduction. Shell managed to reduce its operational costs by more than billion. [...]